British Airways owner International Airlines Group made a £1.5bn loss in the first three months of the year, as chief executive Willie Walsh said it would take three years for passenger demand to recover to pre-pandemic levels.
IAG has halted 94% of its flights in response to travel restrictions during the coronavirus pandemic, causing it to bleed cash. Last week, British Airways set out plans to make up to 12,000 of its staff redundant because of the global collapse in air travel.
Walsh will stay on as chief executive of IAG until 24 September, the airlines group announced, having previously agreed to delay his retirement to help steer it through the Covid-19 crisis. He had been due to retire in March.
Losses after tax at IAG surged to €1.68bn (£1.47bn) during the first quarter, compared with a profit of €70m in 2019, it told the stock market on Thursday. That loss included a €1.3bn charge as fuel and currency hedges became worthless.
The group confirmed it has been among firms who accessed the UK coronavirus corporate finance facility, a government-backed scheme to help large companies borrow money cheaply. It has also received a £900m loan from the Spanish government and has extended its bank borrowing.
The loss will be “significantly worse” during the current quarter, IAG added. It is not planning for a “meaningful return” of passengers until July at the earliest, carrying only half the passengers it initially planned this year.
IAG’s cash and other readily available funds stood at €10bn at the end of April, giving it a strong buffer. However, the airline group is still seeking to make swingeing job cuts and savings, including about 900 at Irish flag-carrier Aer Lingus as well as the 12,000 at BA.
Willie Walsh, who will retire in September, after delaying his planned exit in March to oversee the crisis response, said: “The operating result up to the end of February was in line with a year ago. However, March’s performance was severely affected by government travel restrictions due to the rapid spread of Covid-19 which significantly impacted demand. Most of the loss made in the quarter occurred in the last two weeks of March.
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He added: “We do not expect passenger demand to recover to the level of 2019 before 2023 at the earliest.”
Walsh’s retirement had already been announced in January but he agreed to delay the transition as the extent of the chaos caused by the pandemic became clear. The Iberia chief executive, Luis Gallego, will take over from Walsh.
Antonio Vázquez, IAG’s chairman, said: “We are grateful that Willie delayed his retirement at this challenging time providing the airlines’ management with the necessary stability to focus on the immediate response to the crisis. We look forward to working closely with Luis in his new role.”